When even one of the most powerful and better-established retailers in the whole world is scrambling to navigate through the storm that is hitting the retail sector right now, then you know for sure that something really scary is happening. Amazon, the largest online retailer and tech powerhouse in the globe, is coping with a series of challenges that range from billionaire losses, crashing stock value, mass store closings, layoffs, negative profits, and a chilling outlook for 2023 and beyond. At this moment, we are watching one of the biggest players in the market being absolutely crushed in the brick-and-mortar sector as high inflation and soaring interest rates affect businesses and consumers alike.
For example, Amazon is shuttering dozens of Whole Foods stores all over the U.S. as cash-strapped consumers turn to big-box and discount retailers to stretch their dollars as far as they possibly can. A source familiar with the matter told Insider that many more locations may soon be on the chopping block given that the organic grocery chain is struggling with declining profits for several quarters now. Even CEO Andy Jassy has admitted that Amazon is postponing new store openings and canceling plans for new locations until they figure out how to differentiate themselves from other established competitors in the market.
Since Amazon bought the organic supermarket chain in 2017, very little has been done to boost the growth of the business, says Lesley Hansell of Riverbend Consulting, a retail consultancy firm. Amazon is failing to adapt to the food sector’s wafer-thin profit margins. And the company is losing the competition against other major grocery retailers who already have consumers in their pocket. Retail consultant Richard Hyman said that Amazon decided to enter a highly competitive industry without fully considering where it fits in this market, and it is going up against food retailers that have had decades to master a complicated trade. “Being big on its own is nowhere near enough to be good,” he told Insider. “Amazon is not a retailer, it’s a tech company, and their absolute core competence is in tech, where they should’ve stayed.”
While Walmart, the largest grocer in the U.S., has over 25% of the grocery market share, according to Euromonitor, Kroger has just over 8%, and Albertsons has roughly 5%, Amazon commands just 1.2% of sales in the grocery market. If anything, Amazon seems lost when it comes to opening a viable grocery chain, says retail consultant Brittain Ladd, who formerly worked as a strategist for the company’s grocery business. “Unfortunately, Amazon right now does not have any strategy for physical grocery stores, just a bunch of ideas,” Ladd highlighted. “
This is the carnage we’ve been warned about, and the worst is yet to come! Many factors will continue to impact Amazon’s brick-and-mortar business, especially if the company doesn’t make the necessary changes to restructure its operations and understand consumer behavior in the physical retail environment. Many more doors could be shuttered for good in the months ahead, hundreds of thousands of jobs are on the line, and the potential of a financial and economic downturn just makes the situation increasingly threatening. The retail sector is facing the most drastic shift we have ever seen in our lifetime, and not even the biggest names in the industry will be able to escape from it! Today, we decided to compile several facts that reveal why Amazon’s retail stores are being financially eviscerated and why they are doomed to fail.
The US is in the midst of a "freight recession," meaning trucks are carrying fewer goods across the country, per BI.
— unusual_whales (@unusual_whales) April 26, 2023